Overview of Leader-Member Exchange Theory

1. Leader-Member Exchange
LMX
Initial Response
Shauna Martin
EDL 601
Fall 2018

2. What is LMX?
According to Northouse (2019), “LMX theory
addresses leadership as a process centered
on the interactions between leaders and
followers” (p. 159).

3. Early Studies Around LMX
Vertical Dyad Linkage Theory: A leader’s
relationship is organized around “a series of
vertical dyads” (Northouse, 2019, p. 139).
Vertical Dyad: An individualized relationship that
a leader forms with each of his or her followers
(Northouse, 2019, p. 141).
In Group: Followers that have a positive
relationship with the leader and who go above
and beyond their formal job descriptions. In turn,
the leader does more for these followers
(Northouse, 2019, p. 140)
Out Group: Followers that may be incompatible
with their leader. Members of the out group
perform only the functions that are within the
scope of their formal job description (Northouse,
2019, p. 140).

4. More on In-Group and Out-Group
In-Group
Relationship with leader is characterized by
● Mutual trust
● Respect
● Liking
● Reciprocal influence
(Northouse, 2019, p. 142)
Out-Group
Relationship with leader is built around formal
communication connected to job descriptions
(Northouse, 2019, p. 142)

5. Later Studies of LMX
Focused on the organizational effectiveness as it related to the quality of the leader-
member exchange.
Findings from later studies indicate that high-quality leader-member exchanges
produced the following:
● Less employee turnover
● More positive performance evaluations
● Higher frequency of promotions
Other positive outcomes are cited in addition to the list above (Northouse, 2019, p.
141).

6. Leadership Making
Prescriptive approach to leadership that emphasizes the leader forging high-quality interactions
with all employees rather than a few.
Phases of Leadership Making
Phase 1: Stranger - scripted roles, one-way influences, low-quality exchanges, self interest
Phase 2: Acquaintance - tested roles, mixed influences, medium-quality exchanges, interested in
self and others
Phase 3: Partnership - negotiated roles, reciprocal influences, high-quality exchanges, group
interest (Northouse, 2019, p. 145)

7. Strengths of LMX
● Strong descriptive theory
● Only leadership theory to emphasize dyadic relationship
● Emphasizes the importance of communication in leadership
● Warns leaders about conscious and unconscious biases
● Shown to produce positive organizational outcomes.

8. Criticisms of LMX
● Can seem unfair because of in-group/out-group dynamic
● Does not account for followers’ perception of fairness
● Major components of the theory are not fully developed.
● Lack of clarity around how contextual factors impact LMX.
● No standardized measures or empirical studies for LMX

9. Further Study of LMX
Quality of LMX exchanges can depend on both
the leader’s perception of the leader-member
exchange and the member’s perception of the
leader-member exchange.
Sherman, Kennedy, Woodard and McComb
(2012) conducted a study that examined four
levels of perception between leaders and
members.
Congruent Perceptions
1. Leader perceives member as “in”/Member
perceives member as “in”
2. Leader perceives member as “out”/Member
perceives member as “out”
Incongruent Perceptions
1. Leader perceives member as “in”/Member
perceives member as “out”
2. Leader perceives member as “out”/Member
perceives member as “in”
(Sherman, Kennedy, Woodard & McComb, 2012,
p. 410)

10. References
Northouse, P.G. (2019). Leadership: Theory and Practice. (8th ed.). Thousand Oaks, CA:
Sage Publications.
Sherman, K. E., Kennedy, D. M., Woodard, M. S., & McComb, S. A. (2012). Examining the
“Exchange” in Leader-member exchange. Journal of Leadership & Organizational Studies, 19,
407–423.